The case involves a petition for cancelling criminal proceedings under Section 138 of the Negotiable Instruments Act against accused, who are directors of M/s. Gallant Computers Pvt. Ltd.
The respondent-complainant claimed that the accused and others placed orders for computer peripherals and accessories and towards the outstanding amounts payable for purchasing the said materials. Cheques issued by the accused directors were returned with an endorsement “Exceeds Arrangement”.
The petitioners resigned from the company long prior to the issuance of the cheques, and they argued that no criminal liability can be attached on them. However, the respondent argued that when there is a specific allegatiion in the complaint that the accused-Directors were responsible for the conduct of the business of the company, and such allegation was disputed by the Directors, the disputed fact will have to be decided only during the course of trial.
The court referred to previous judgments in similar cases, where it was observed that the disputed fact must be determined during the trial. The court also noted that certified copy of Form-32 filed by the accused director to show that he had resigned prior to the issuance of the cheque is a public document as per Section 74 of the Indian Evidence Act, 1872.
The court concluded that if such an accused director who had resigned long prior to the issuance of the cheque and stopped depending on the the company, he should not be implicated in a criminal trial.